SUSTAINABLE FINANCE

What are carbon credits? Carbon credits differ based on a variety of factors, including market origin, mechanism and approach.

In some cases, carbon credits are used for compliance to meet legally mandated emissions caps, such as in the European Union Emissions Trading System( EU ETS). In others, their purchase may be voluntary.

Carbon avoidance credits are generated by projects that prevent emissions from occurring like renewable energy installations or forest conservation. Carbon reduction credits reduce emissions compared to a baseline, such as improving industrial efficiency. Carbon removal credits physically remove carbon dioxide or other greenhouse gases from the atmosphere, such as reforestation or enhanced weathering.

Nature-based credits include solutions like forestry, land use, regenerative agriculture and mangrove protection. Technology-based credits include carbon capture and storage, direct air capture, biochar and methane capture.

Ex-ante credits represent projected future emissions reductions and ex-post credits are issued after the emissions reductions have been verified.

Who provides carbon credits? The carbon market is diverse. Different purposes, regions and regulatory frameworks have different needs, and the pool of carbon credit providers has grown to match this. Different marketplaces are available with different specialties for the unique requirements of each business.

Climeworks says it crafts“ bestin-class” carbon removal strategies, including its own Direct Air Capture( DAC) technology. It works with businesses including the LEGO Group, H & M Group, Morgan Stanley and SAP. All carbon removal solutions, suppliers and projects it works with have been verified or certified by internationally recognised standards.

3Degrees can curate a portfolio of independently verified credits from projects that map to specific goals and purchasing criteria. It says it leads the

180 September 2025